"an investor who bought OGX shares at its I.P.O. price would now have lost over 96% of the original investment."
The "company is producing hardly any petroleum, and it must make bond payments of about $40 million in October and $100 million in December."
Brazilian Regulators Open a New Inquiry Into Batista - NYTimes.com
Ricardo Moraes/ReutersEike Batista, left, with President Dilma Rousseff of Brazil, was flying high in 2012. Now his energy empire is being dismantled.
SÃO PAULO, Brazil – Brazil’s securities and exchange commission said on Thursday that it had opened a new formal investigation into the business dealings of the onetime billionaire Eike Batista.
The commission, known as the CVM, is examining whether Mr. Batista and five other executives of the petroleum company OGX may have violated several articles of Brazil’s corporate legislation.
Brazil’s rules require management to release material information that could influence a company’s share price as well as disclose information about their personal ownership stakes in the company.
In March, regulators had opened a separate inquiry into whether Mr. Batista might have violated disclosure rules.
The CVM has not revealed what specific events led to either inquiry, but OGX frequently announced major petroleum discoveries that subsequently proved to be economically unviable.
The new inquiry is the first indication that Mr. Batista or other top managers of his companies may possibly have changed their ownership stakes in an illegal manner, as the assumption has been that Mr. Batista has been hurt along with his investors.
Shares in OGX fell more than 7 percent on Thursday morning in São Paulo, trading around 38 centavos apiece, or about 16 cents.
The latest problem just adds to the woes of Mr. Batista, who was once Brazil’s richest man and had vowed to become the world’s richest as well.
When OGX went public in June 2008, it sold shares to investors at 1,131 reais apiece, or about $690 at the exchange rate at the time.
The company had a 100-1 share split in December 2009. But an investor who bought OGX shares at its I.P.O. price would now have lost over 96 percent of the original investment.
In recent months, Mr. Batista’s other companies have seen similar collapses in their share prices, as cash flow proved insufficient to service debt and to make the extensive investments that were supposed to create an empire of energy, mining and logistics companies.
Mr. Batista’s fortune, once over $30 billion, has collapsed with it, and he has sold off several assets in recent months.
The company is producing hardly any petroleum, and it must make bond payments of about $40 million in October and $100 million in December.
The world’s largest bond investment firm, Pimco, invested heavily in OGX’s bonds and is leading a creditor committee that is negotiating with OGX.
Mr. Batista ostentatious lifestyle had once been popular gossip fodder. He raced speedboats, married a famous model and had dinner with Madonna. But since his fortunes have fallen, he has been forced to sell or pull back on his holdings.
Among the other assets he is seeking to sell is a luxury hotel in Rio de Janeiro, the Hotel Glória.
An attempt to sell his $19 million yacht, the Pink Fleet, failed, and Mr. Batista sent the yacht to the junkyard last month to be scrapped, presumably to save on maintenance costs.
Brazilian Regulators Open a New Inquiry Into Batista - NYTimes.com
